EconPapers    
Economics at your fingertips  
 

Inequality Measures as Tests of Fairness in an Economy

Ravi Kanbur, Stuart Sayer () and Andy Snell ()

ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh

Abstract: Standard measures of inequality have been criticized for a long time on the grounds that they are snap shot measures which do not take into account the process generating the observed distribution. Rather than focusing on outcomes, it is argued, we should be interested in whether the underlying process is "fair". Following this line of argument, this paper develops statistical tests for fairness within a well defined income distribution generating process and a well specified notion of "fairness". We find that standard test procedures, such as LR, LM and Wald, lead to test statistics which are closely related to standard measures of inequality. The answer to the "process versus outcomes" critique is thus not to stop calculating inequality measures, but to interpret their values differently - to compare them to critical values for a test of the null hypothesis of fairness.

New Economics Papers: this item is included in nep-ecm, nep-hap and nep-ltv
Date: 2007-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.econ.ed.ac.uk/papers/id174_esedps.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:174

Access Statistics for this paper

More papers in ESE Discussion Papers from Edinburgh School of Economics, University of Edinburgh 31 Buccleuch Place, EH8 9JT, Edinburgh. Contact information at EDIRC.
Bibliographic data for series maintained by Research Office ().

 
Page updated 2019-10-23
Handle: RePEc:edn:esedps:174